Charitable Deduction Vocabulary

When making charitable contributions for taxes, it is very useful to know certain vocabulary rules. This page provides an overview of some of the most common terms used for making charitable contributions on a tax return.

 

Contemporaneous Written Acknowledgment

A written statement needed to deduct a charitable contribution of $250 or more. The contemporaneous written acknowledgment must have a description of the volunteer’s services performed. It also has to have the dates of the services performed. The volunteer has to have this acknowledgment by the earlier of the time the volunteer files the return claiming the deduction or the due date of the return, including extensions. A good source for learning more is Publication 1771, Charitable Contributions—Substantiation and Disclosure Requirements. All of the acknowledgment rules fall under § 170(f)(8).

 

Form 990

This form, Return from Organization Exempt from Income Tax, is used by taxexempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with the information required by section 6033. Under section 501(c), 527, or 4947(a)(1) of the Internal Revenue Code (except private foundations). It is an information return (it is not a tax return) most mid-to-large-size, tax-exempt organizations must file with the Internal Revenue Service every year. The form is used to report revenues, expenses, activities, governance, relationships, and transactions.

 

What is an IRS Qualified Organization?

A domestic organization recognized as tax exempt under IRC § 501(c)(3) or a federal, state, or local government. Becoming a Qualified Organization involves completing a Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Section 501(c)(3) tax-exempt organizations can be operated only for certain purposes. These purposes may include religious, charitable, educational, scientific, literary, prevention of cruelty to children or animals, or fostering national or international amateur sports competition.

 

What is Schedule O?

This schedule, Supplemental Information to Form 990 or 990-EZ, is the only schedule that all Form 990 filers are required to file. It provides supplemental information to describe or explain the organization’s responses to questions contained in the core form and schedules.